Feature: Can new products re-invigorate General Motors?

by Chris Chase - August 1, 2006

2007 Saturn Sky. Photos: General Motors. Click image to enlarge

By Jeremy Cato

Warren, Michigan – In the darkened, security-patrolled hush of General Motors’ sprawling design centre, Mike Simcoe and Gary Smith are here to convince us that GM has a product pipeline bursting with innovative, stylish vehicles.

There at the far end of the room is Saturn’s entire line-up through 2007-2008. To the left and right are the new pickups and sport-utility vehicles from Chevrolet and GMC due to be launched early next year. Beside us is the next Cadillac CTS mid-luxury sedan and squarely in the middle is a new family vehicle from Buick that doesn’t at all look like my grandfather’s Oldsmobile – and certainly it has nothing in common with the bland Buick’s we’ve seen for decades.

“With our build quality so much better there is so much more we can do now,” says Simcoe, the Australian brought to North America to spice up GM’s designs for car-based vehicles. “Our interiors now have integrated systems, more storage and we can focus on design details.”

Simcoe and Gary Smith, the vehicle line executive for large trucks like the next Chevrolet Avalanche and GMC Denali, emphasize that all future GM vehicles will greatly surpass not just GM’s own current line-up, but also the competition in terms of refinement, build quality, functionality, storage room, fuel economy and performance.

Saturn Aura concept. Click image to enlarge

Certainly the Saturn portfolio, from the Sky roadster due next year to the Aura midsize sedan expected in 2006-2007, looks impressive. They are very, very stylish and definitely stand out from virtually everything else in this room of some 50-odd future products.

Over at the Chevrolet corner, the new full-size trucks based on the re-engineered GMT 900 platform promise class-leading fuel economy as well as 300-horsepower-plus performance. Smith also takes pains to point out the focus his team has put on execution and refinement, by pointing to the tight panel gaps, reduced gloss of interior materials and new front-end fascia designs.

A peek at future GM products
By Jeremy Cato

This reporter agreed not to divulge specific details of GM’s future product plan based on what was shown at the Warren design centre. But based on other sources, here is what you can expect from GM in the next few years.

Buick
-Lucerne: a replacement for the LeSabre, the Lucerne will be the first Buick passenger car in a decade to offer V8 power.
-Rainier: an update for this SUV will likely come in 2007.
-Unnamed crossover utility vehicle: GM is working hard on a seven-passenger car-like truck based on the Centieme concept. Based on the Lambda architecture, it likely will replace the Rendezvous in 2008.

Cadillac
-DTS: The next new Cadillac, it replaces the current DeVille.
-XLR-V: powered by a 4.4-litre supercharged V-8 engine and 440 horsepower, this is the high-performance V-Series version of Caddy’s hardtop roadster.
-CTS: due in 2007, the next-generation CTS should grow slightly.
-Escalade: this big SUV rolls out in 2007, along with other GM full-size SUVs.

Chevrolet
-Corvette Z06: with 500 horsepower and 475 lb-ft of torque from a 7.0-litre, hand-built V-8, this hot-shoe ‘Vette will do 0-100 km/hour in less than four seconds.
-HHR: On sale now, the HHR is a wagon based on GM small car architecture.
-Impala/Monte Carlo: they get revamped with a trio of powertrains, including a small-block V-8.
-Avalanche: planned for next year as a 2007 model, this pickup is completely revamped with other GM full-size trucks.
-TrailBlazer: This SUV gets an update for 2007.

GMC
-Suburban and Yukon: remade to go on sale in the spring of 2006, these large SUVs are critical to GM’s turnaround.

Hummer
-H3: Arriving in showrooms right now, this is the “baby” hummer expected to increase sales of this GM start-up brand.

Pontiac
-Solstice: the much-anticipated roadster arrives this September, just as the convertible selling season comes to a close.
-Torrent: Pontiac’s version of the Chevrolet Equinox crossover utility is due as a 2006 model.
-G6 convertible hardtop: due next year in the spring, this is the open-air version of the G6.

Saab
-9-7XA: a new SUV derived from the Chevrolet TrailBlazer.
-9-5: a new 9-5 sedan is due next year.
-9-6X: this is a new crossover vehicle expected in the next year.
-9-3 SportCombi: a wagon version of the 9-3 sedan.

Saturn
-Sky: the much-anticipated roadster goes on sale next year.
-Aura: a four-door sedan based on the next-generation of GM’s Epsilon mid-size car architecture.
-Vue: a new version of the current crossover utility is due late in 2006.

“And we have focused on the driving experience,” he adds. “These trucks drive smaller,” he adds, noting suspension changes designed to give these big trucks more nimble handling.

In fact, GM chairman and chief executive officer Rick Wagoner is counting on the next generation of models from Chevrolet, Cadillac, Saturn, Pontiac, GMC, Saab, Hummer and Buick to pull the company out of its current morass of billion-dollar losses and massive job cuts. At GM’s recent annual general meeting, Wagoner said, “We do not see this issue being fixed by cutting costs alone. We know we have to work on the revenue side.”

GM has made huge strides over the last decade in turning around the efficiency of its plants and the quality of its products.
Overall, the respected Harbour Report of manufacturing efficiency finds that GM is now among the most efficient automakers in North America, and its Canadian manufacturing facilities in Oshawa, Ontario are the very best on the continent in terms of fewest worker-hours required to assemble a vehicle. The Oshawa #1 plant, which builds Chevy Monte Carlos and Impalas, requires just 15.85 worker hours to build a vehicle. Harbour says GM has four of the 10 most efficient plants on the continent.

But buried in the Harbour study were some very troubling numbers. In terms of profit per vehicle, well, GM doesn’t make profits on its vehicles, says Harbour. In fact, the study reports that GM loses $2,311 per vehicle in North America (all figures in U.S. dollars). Contrast that to the profitability of Nissan ($1603), Toyota ($1,488), Honda ($1,250), Ford ($620) and DaimlerChrysler ($186). Toyota boasts an average transaction price of $26,514 per vehicle, versus $20,659 for GM, which heavily discounts many of its vehicles with cash-back giveaways and cut-rate financing deals.

As Wall Street Journal reporter Joe White put it recently, GM is now efficiently building cars and trucks with high quality that not enough people want to buy – at least at full price.

At the GM annual meeting, Wagoner said his company is devoting more resources to product development and expects to spend about $1 billion more annually on it going forward. Lutz, the septuagenarian vice-chairman for product creation recruited to GM by Wagoner himself, told the AGM that the money is being spent on developing an array of quintessentially unique cars and trucks.

“We see a huge opportunity here for us to capture the essence of the American automobile in its glory days,” he told the meeting. “The Japanese can’t follow us there any more than they could follow Harley-Davidson. We believe there is a lot of gold in those hills and we intend to mine it. In the next two or three years, you’re going to see product that takes a back seat to nobody.”

Based on what Simcoe and Smith are showing me here in the design centre, it seems clear that GM is working on some very interesting new models, though critics argue GM doesn’t need to get too fancy. Maryann Keller, long-time auto analyst and harsh GM critic, says GM simply needs more good mainstream vehicles. The current Chevrolet Cobalt is a good example.

2006 Chevrolet Impala SS. Click image to enlarge

Writing recently in The Washington Post, Keller, who has authored two best selling books on GM, says, “What ails GM today is much the same as what ailed it then (in the 1980s) — and it’s not just a matter of big pension plans, health care costs for workers or undervalued Asian currencies. The problem is that GM has forgotten how to make cars that people want to buy.”

Simcoe and Smith are earnestly trying to convince this reporter that GM understands that the competition is always moving forward and the “new” GM is moving more quickly and with more dedication.

2006 Pontiac Solstice. Click image to enlarge

What’s clear is that even as Wagoner was announcing at the AGM another round of job cuts and factory closings, what will determine GM’s future is the success of these models arrayed here in the design centre. Cost-cutting schemes do not pave the way to successful corporate turnarounds.

Keller and others remain skeptical. “One has to wonder why it has been so hard for GM to figure out what car buyers want and then give it to them. The company has not been able to leap ahead of the competition since the early 1980s when it led the way into front-wheel drive. Its failures are numerous,” writes Keller in the Post.

There can be no more failures at GM if the big automaker is to avoid downsizing to a point where fast-rising Toyota passes it as the world’s largest automaker.

As a child, Chris spent much of his time playing with toy cars in his parents’ basement; when his mother would tell him to go play outside, he made car sounds while riding his bicycle or dug roads for his toys in the flower garden. Now he gets to indulge his obsession playing with real cars that make their own cool noises, and gets paid for it.